Recommendation 4

The Environment Agency is failing to ensure that wastewater companies meet their environmental targets, resulting in excessive use of combined sewer overflows and environmental pollution. The EA and Ofwat are taking enforcement action against every wastewater company for their poor performance on storm overflows. Previous mismanagement has presented a risk to public health. Over a quarter of the EA’s 4,600 inspections of wastewater treatment works last year found issues, including 92 serious breaches. The EA says there are too many offences to prosecute them all, and intends to use new powers to raise civil penalties, which it expects will be faster and cheaper than prosecutions. Companies currently volunteer undertakings (where they take action to fix the issue or return money to bill-payers) in a minority of cases. Otherwise, fines go to HM Treasury. Defra has still not distributed the £11 million Water Restoration Fund it created in 2024 from water company fines to make environmental improvements, despite announcing recently that a further £100 million would be available. Going forward, companies are expected to spend around £12 billion in the next 5 years on storm overflows, but this will only fix around 44% of overflows. recommendation a. Defra should disburse the amounts promised through the Water Restoration Fund in 2024 and set out plans for the additional funding announced in June, by the end of 2025. Defra and the Environment Agency should work urgently to ensure money raised from fines permanently goes to improving the system and not simply returned to the Treasury 5 b. The Environment Agency and Ofwat should write to the Committee, alongside the Treasury Minute response to this report, setting out how they will hold water companies to account for fixing problems and improving their environmental performance